Uptake improves or price cuts coming

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Industry faces the prospect of more PBS price reforms if the emerging biosimilar market continues to be characterised by low uptake.

Arguably the $1.8 billion in price cuts negotiated with the sector earlier this year, which fall heavily on patented medicines, was in part due to the likely failure of 'a-flagging' to deliver anything close to the $880 million budgeted when it was announced as part of the 2015 PBS Access and Sustainability Package.

Since it was announced, the Pharmaceutical Benefits Advisory Committee (PBAC) has 'a-flagged' biosimilar versions of two biological disease-modifying anti-rheumatic drugs (bDMARDs) - etanercept and inflixmab - and insulin glargine. Only the two bDMARDs have been listed on the PBS with 'a-flags', allowing pharmacy-level substitution, while Lilly declined the listing of its insulin glargine, BASAGLAR, because the 'a-flag' conflicted with its TGA approval. Biosimilars for IVF therapy were recommended and listed without an 'a-flag'.

Despite the 'a-flags' uptake of the biosimilar bDMARDs remains very low. New measures are in the process of being implemented to increase their uptake but few people believe they will make a difference to the extent government will achieve its savings target.

The new measures include encouraging biosimilar prescribing for treatment naive patients, with supporting changes to prescribing software, and lower PBS prescribing authorities. They will be implemented over time, with only a limited impact in the next year, and prescribers remain wary.

Both the AMA and the Australian Rheumatology Association have expressed concern over the proposed implementation of the new measures.

In the case of the AMA, it has opposed any move to 'prefer' biosimilars over originator biologics, arguing for use of the word 'encourage' in the note to be added to the PBS schedule, and also rejected lower PBS prescribing authorities for biosimilars.

"Attempting to increase biosimilar prescribing with a heavy-handed regulatory approach, without giving time for educational approaches, such as the Government’s Biosimilar Awareness Initiative, to have an effect, flies in the face of the Government’s own policies to reduce red tape and to use regulatory approaches sparingly and wisely," it said.

Opposition from prescribers, who will maintain the power to prescribe by brand and block substitution, likely remains the most significant barrier to the uptake of biosimilars.

Yet industry will ultimately pay the price for any policy failure with the Department of Finance likely to demand further savings from medicines listed in the F1 formulary to address any shortfall.

The three agreements covering pharmacy and medicine suppliers only require government to consult on any further changes. They impose some limitations on government, in terms of specific measures, but only requires it to consult on any price related reforms during the term of the agreements.